$5,000 monthly rent on a $220,000 salary?
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Where are you on the chart?
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That would be way too high for my taste, but it really matters your personal situation (savings, debts, stage of life, etc….) as well as where you live. If I know nothing else, I would tell you to try and find a cheaper spot.
According to “sound investment advice”, your monthly rent/mortgage should only be 30% of your monthly pay. So, for a $5,000 monthly rent, your monthly pay should be $16,700 before taxes which equates to $200,400 yearly income before taxes. At $220,000 you should be fine.
You have to account for taxes too. He’s probably only getting $150k of that in cash, so $5k monthly = $60k yearly would be 40%, which is way too large.
It’s affordable but a textbook example of lifestyle creep
This
Enthusiast
This is known as house poor.
I have a small home in the burbs and I am grateful that my rent is not steep, my town is safe, I have 2 vehicles, a few pets, some hobbies and no longer paying a rent. Sometimes, I could live without the expenses to home owning such as today putting in a new shower...but really can't complain.
Pro
I personally wouldn't, but I've generally preferred to spend less on housing and go for quirky apartments in good locations. Has enabled me to save a lot (bought a house recently), and also buy the things I want and travel places I want to go.
It's all about what you value and how you want to spend your money.
Would love to see this place
Pro
Yes. With a doorman, in unit washer dryer, and very close to the subway. This is why I’m saying 5k isn’t an impressive looking apartment. A studio in Manhattan is over 3k
Yeah I pay $3850 and only make like $150k so you should be ok. You’d be better served with low 4k rent though
Why don’t you just buy a house?
$2310 a month on a 60K salary. 90% of my base pay usually goes to bills
I felt this 💔
I make around 250k and still sticking to 2k rent until I get at least to 300-350.
To be fair, he’s probably graduated not too long ago given $250k total comp at google, so a studio is probably sufficient.
Rising Star
I wouldn’t… my HHI is around 220k and our mortgage is $3k and even that feels high sometimes
HHI of about $300k and mortgage payment is $2650. We’re pretty comfortable there, but could be more comfortable. The house is old, large, and modestly historic, so it generally requires a lot of maintenance and everything is just more expensive to do correctly. We’d probably be comfortable with a larger mortgage payment, if it was a brand new house that should be relatively low maintenance for 15-20 years
I personally would not do it. However, I am someone who prefers to spend money on experiences, not things. I have a 15-yr mortgage that is a fraction of that cost, so couldn’t imagine spending that on rent.
While I do live in a LCOL area, my mortgage is not 15 years old, it’s only four years old as we moved to a larger home.
jesus. buy a place if ur paying $5000. i bought a 3200 sq ft place and my mortgage is $2100. i rent it for $3500/month. it pays for the condo i live in too. put ur money to better use. rent isnt it.
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Not everyone like in Idaho @PwC1
The problem with using your gross income as a data point for how much you should spend on housing is that as you get up there in income, particularly in places like nyc or cali, a big chunk of it gets confiscated away via taxes. I would look at your net take home and compare it to that. Growing up my dad paid over 50 percent to the government in taxes when you combined federal, state, and local.
This!
Little risky imo, big commitment for money that is not helping you build equity. However with prices and interest rates currently, 5k for buying power is likely a noticeable downgrade
$5k rent is No problem if you’re making $220k annually, That’s $18.3k a month, leaves you $13k after your largest expense and if you can’t make it on that something is wrong. Quit playing and buy a house unless you move a lot.
Rising Star
The rule of thumb I’ve always seen is that rent should be no more than 30% of your gross income. By that measure the rent you said should be fine, but as others said it depends on the overall state of your finances and your future goals.
Rising Star
Agreed this is the common metric here but it’s definitely outdated in HCOL areas unfortunately
It’s a lot for renting. Chances are you will be stuck in a 2 year lease at minimum so at least you’re stuck paying 120k just on renting, could easily be put towards buying a house.
Pro
Exactly. $120k in rent. Insane.
Conversation Starter
You only live once! Any place you rest your head at night should give you peace of mind and comfort in all standards.
That’s like an average 1 bedroom in nyc, if they stick by the 45x rule, you need to make 225.
AGI in 2021 was ~230K. Monthly mortgage includes escrow 2K for a large 4 bd 3ba in the burbs. Zero debt other than mortgage. I honestly wouldn't be comfortable spending more on housing.
@Philips1
If you’re in the city, sounds about right. Also, if you don’t have car payments/ expenses, it is doable.